MediaTek Inc (聯發科), the world’s top 5G smartphone chip supplier, yesterday retained its upbeat forecast for this year and next year due to 5G’s rising uptake, shrugging off a brief disruption to production linked to COVID-19 infections at its local chip testing and packaging partner.
MediaTek’s remarks came after a shareholder at the company’s annual general meeting voiced concern about a ripple effect caused by the infections at King Yuan Electronics Co (KYEC, 京元電子).
KYEC halted production at its factories in Miaoli County for two weeks last month and lowered utilization for the remainder of the month to stamp out an outbreak at its factory in Jhunan Township (竹南).
Photo courtesy of MediaTek Inc
“Based on our management team’s evaluation, the impact should be short-term. [We] expect a gradual recovery from the third quarter,” MediaTek chairman Tsai Ming-kai (蔡明介) said.
Responding to another shareholder’s concerns about a lukewarm recovery in China’s smartphone market, Tsai said MediaTek did not expect weakness in any market, or its consumer electronics segment to impair its business significantly, given its diverse product portfolios.
“We still have a positive business outlook for this year and next year as the company sees growth from smartphones, TVs, tablets, Wi-Fi and ASIC [application-specific ICs],” Tsai said.
Revenue would expand more than 40 percent this year, from NT$322.1 billion (US$11.54 billion) last year, as projected in April, due mainly to the increasing uptake of 5G smartphones, MediaTek chief executive officer Rick Tsai (蔡力行) said.
Gross margin would improve to between 44 and 46 percent this year, he added.
As the world ushers in the 5G era, the uptake of 5G-enabled devices, including smartphones, is gaining momentum, with China having the fastest uptake, Tsai Ming-kai said.
Demand would pick up gradually after the US and European economies reopen as the COVID-19 situation eases, he said.
MediaTek forecast that the global 5G smartphone market would reach 500 million units this year with China contributing 300 million units.
Aside from 5G smartphones, MediaTek also reported growth from customers’ market share gains in the 4G phone segment in emerging markets from Southeast Asia and India to Africa, Tsai Ming-kai said.
Shareholders yesterday approved a planned cash dividend distribution of NT$21 per common share, representing a payout ratio of 80.73 percent based on the company’s earnings per share of NT$26.01 last year.
Shareholders also approved a plan to pay a cash dividend of NT$16 per common share each year over the next four years.
KYEC yesterday reported that its revenue dropped 30.77 percent to NT$1.98 billion last month from NT$2.86 billion in May, closely matching the firms’ estimate due to temporary factory shutdowns.
KYEC reported NT$7.6 billion in revenue for last quarter, little changed from NT$7.63 billion in the first quarter.
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